Dunedin Ent.it. Regulatory News (DNE)

19 Jun 2006 07:01

Dunedin Enterprise Inv Trust PLC19 June 2006 For release 07.00am 19 June 2006 Dunedin Enterprise Investment Trust PLC Preliminary Results for the year ended 30 April 2006 Dunedin Enterprise Investment Trust PLC, the private equity investment trustwhich specialises in investing in management buyouts and management buyins witha transaction size of £10 million to £50 million announces its preliminaryresults for the year ended 30 April 2006. Financial Highlights: • Realisations totalling £70 million, generating a profit of £24.1 million over valuation at the start of the year, an uplift of 53%. • Share price total return 35.4% including dividends paid in year • Net asset value per share increased by 19.7% to 498.2p per share • Total net assets now £151.3 million • Total return per ordinary share increased to 91.0p (2005: 74.1p) • Final dividend of 7.45p; a full year dividend of 9.45p; an increase of 5% • An additional special dividend of 2.0p • Investments during the year of £21.6 million, including: • £7.5 million investment in management buyout of Zenith Vehicle Contracts • £4.3 million investment in management buyout of Practice Plan • £4.1 million investment in management buyout of RSL Steeper Comparative Performance Periods to 30 April 2006 1 Year 3 Year 5 Year 10 Year % % % %Net asset value per ordinary share 19.7 61.1 37.5 102.8Share price 32.3 109.5 43.1 121.1FTSE Small Cap Index 25.0 90.4 15.5 57.1FTSE All Share Index 27.8 61.6 7.0 60.4 Edward Dawnay, Chairman of Dunedin Enterprise Investment Trust PLC, commented: "In the past year, continued economic growth and low interest rates havesupported a rising equity market and this in turn has resulted in a strongprivate equity sector. Dunedin Enterprise has been well placed to take advantageof this favourable climate and during the course of the year made realisationstotalling some £70.0 million. As a result I can report another increase in net asset value of some 19.7% forthe year to 30 April 2006. The share price of Dunedin Enterprise increased by32.3% over the same period. This compares favourably to the FT Small Cap Indexwhich rose by 25.0% over the year to 30 April 2006. I am also pleased to announce that Dunedin Enterprise was named the Best PrivateEquity Trust in Money Observer Magazine's Annual Investment Trust Awards for2006. The award was won in recognition of consistently superior investmentperformance in each of the past three calendar years, outperforming 18 other UKprivate equity trusts. The performance of the portfolio overall continues to be strong andprofitability in the underlying investments continues to grow. Economicconditions in the UK are favourable for the time being and I believe the outlookfor Dunedin Enterprise remains positive." For further information please contact: Ross Marshall Fiona MacRae Chief Executive Officer Marketing Manager Dunedin Capital Partners Limited Dunedin Capital Partners Limited 0131 225 6699 0131 718 2313 07768 794 180 07810 376 287ross.marshall@dunedin.com fiona.macrae@dunedin.com Notes to Editors Dunedin Enterprise Investment Trust PLC is managed by Dunedin Capital PartnersLimited. Dunedin Capital Partners Limited is an independent private equitycompany owned by its directors. The company specialises in providing equityfinance for management buyouts and management buyins with a transaction size of£10 million - £50 million. It operates throughout the United Kingdom from itsoffices in Edinburgh and London. Dunedin Capital Partners is itself the result of a management buyout which tookplace in 1996. Dunedin Enterprise's primary objective is to achieve substantial long termgrowth in its assets through capital gains from its investments. For more information on Dunedin Enterprise, its portfolio and investmentapproach, please visit the website www.dunedin.com. Investors can buy shares in the company through regular savings, PEP/ISA andpension plans. For further information, call the Aberdeen Asset Managershelpline on 0500 00 40 00 or visit the website atwww.dunedinenterprisetrust.co.uk. Chairman's Statement In the past year continued economic growth and low interest rates have supporteda rising equity market and this in turn has resulted in a strong private equitysector. Dunedin Enterprise has been well placed to take advantage of thisfavourable climate and during the course of the year made realisations totallingsome £70.0 million. As a result I can report another increase in net asset valueof some 19.7% for the year to 30 April 2006. The share price of DunedinEnterprise increased by 32.3% over the same period. This compares to the FTSmall Cap Index which rose by 25.0% over the year to 30 April 2006. I am also pleased to announce that Dunedin Enterprise was named the Best PrivateEquity Trust in Money Observer Magazine's Annual Investment Trust Awards for2006. The award was won in recognition of consistently superior investmentperformance in each of the past three calendar years, outperforming 18 other UKprivate equity trusts. It is also worth noting that according to the Associationof Investment Trust Companies, the private equity sector remains the topperformer over ten years out of all the Association's members. Interest in the private equity sector, as last year, continues to increase. In2005 the total value of deals in the UK buyout market was £24.2 billion.Although the UK private equity sector is relatively mature, there is a worldwide institutional demand and this has a direct influence on the price paid forbusinesses. As I reported last year, this has a beneficial effect upon disposalsbut contributes to the competition for deals. The lower mid market ismarginally less competitive and with an experienced team your Manager hascontinued to acquire businesses at reasonable prices through its extensivenetwork of contacts. Portfolio activity The Company invested £21.6 million in the year to 30 April 2006. A total of£15.9 million was invested in three new investments, Zenith, Practice Plan andRSL Steeper and a further £5.7 million was invested in limited partnership fundsand existing portfolio companies. Total realisation proceeds from the portfolioin the year were £70 million, which generated a profit of £24.1 million overvaluation at 30 April 2005. The realised gain was generated principally throughthe sale of Caledonian Building Systems, Letts Filofax, C6 Solutions and HayleyConference Centres combined with the flotation of Davenham. The scale of disposals in the past year is such that realisations in the currentyear will inevitably be at a lower level. This will have a consequential impacton the valuation uplifts achieved on exits. The Manager's review gives details of portfolio movements, including significantacquisitions, disposals and valuation changes. Over the past 5 years Dunedin Enterprise has invested in equal proportionsalongside the first Dunedin Buyout Fund ("Fund 1"), in which it had a £7 millioncommitment, representing some 13% of Fund I. Fund I, which is nearing the endof its investment period, has invested £39 million in eleven buyouts. The totalreturn from these investments at 30 April 2006 is £74 million and includes fivedisposals and listings and is showing a money multiple of 1.9 times cost and anet annualised internal rate of return of 25%. In May 2006, your Board made a commitment of £75 million to the Dunedin BuyoutFund II ("Fund II") which your Manager is currently raising. As with Fund I, itwill enable Dunedin Enterprise to gain access to larger transactions within themid market range. Fund II will invest in UK buyouts with a deal size of £10million to £50 million. No double fee will be charged by your Manager. The commitment to the new fund will be met substantially by the Company's cashdeposits which have recently increased on the back of a series of successfuldisposals. Dunedin Enterprise will still retain the flexibility to investoutside the MBO market as it has done in the past. At the year end your Company had investments in unquoted companies totalling£57.9 million and £8.7 million in a quoted company. Cash and near cash amountedto £84.7 million and undrawn commitments to limited partnership funds amountedto £95.3 million. Investments plus commitments to private equity funds amountto £161.9 million, representing 107% of net assets at the year end. Dividend The Board is recommending a final dividend of 7.45p, making a total dividend forthe year of 9.45p, a 5% increase on last year. The final dividend will be paidon 15 September 2006 to shareholders on the register on 18 August 2006. The Board has also resolved to pay a special bonus dividend of 2.0p per share toshareholders on the same date as payment of the final dividend. This specialdividend results from the additional dividend and loan interest income generatedfrom realisations and reflects a successful year for your Company. It is not theintention that this bonus dividend should be repeated. Corporate governance Corporate governance plays an increasing role in the life of the Company. Eachyear the Board evaluates the Manager, its own performance, that of itscommittees, the individual directors and the Chairman. In evaluating theManager, the Board reviews inter alia their management process, investmentstyle, resources and risk control. The Board confirms that it is satisfied withthe results of the review and is therefore of the opinion that the continuingappointment of the Manager is in the interests of shareholders. Annual General Meeting I very much look forward to welcoming shareholders to the AGM which will be heldat the Merchants Hall in Hanover St, Edinburgh on Tuesday 12 September at 12noon. It will be preceded by a presentation by the Managers, reviewing the yearand commenting on the outlook. EW Dawnay, Chairman 16 June 2006 Manager's Review Overview During the year, Dunedin Enterprise continued to build upon the good progressmade last year. Net asset value per share increased by 19.7% in the year from416.3p to 498.2p (2005: 18.8%) and the net asset value total return per shareover the year was 22.3% (2005: 21.7%). Your Company's share price rose by 32.3% (2005: 34.1%) over the year from 346pto 457.75p. The total return to shareholders, comprising the rise in the shareprice and dividends paid, was 35.4% (2005: 38.1%). The strong share priceperformance resulted in a reduction of the discount of the share price to netasset value from 16.9% at 30 April 2005 to 8.1% at 30 April 2006. The growth in net asset value has been driven by a combination of a number ofsuccessful realisations, strong trading performance and beneficial movements inprice earnings multiples. The total movements in net assets can be summarisedas follows: £'mNet assets at 30 April 2005 126.4Unrealised value increases 13.7Unrealised value decreases (12.8)Realised profit over opening valuation 24.1Profit attributable to shareholders less expenses charged to capital 2.7Dividends paid to shareholders (2.8)Net assets at 30 April 2006 151.3 Dunedin Enterprise received a total of £70 million from a number of significantrealisations in the year. This arose principally from the flotation of Davenhamon the Alternative Investment Market, the secondary buyout of Letts Filofax andthe trade sale of Caledonian Building Systems. Investment activity in the year totalled £21.6 million. An investment of £7.5million was made in Zenith Vehicle Contracts, a car fleet management servicescompany, £4.3 million in Practice Plan, a provider of payment schemes to dentalpractices and £4.1 million in RSL Steeper, a supplier of prosthetics andorthotics. Each of these new investments were management buyouts. An initialinvestment of £0.6 million was made in the LGV5 Private Equity Fund. A further£5.1 million was invested in ten existing portfolio companies. Your Company made a £75 million commitment to the Dunedin Buyout Fund II ('DBFII') in May 2006. The fund is managed by Dunedin Capital Partners, the Managerof your Company, and follows an initial investment made in DBF I in 2001. DBFII will invest in UK mid-market buyouts with a transaction size of £10 - 50million. This continues to be the core investment strategy of the Company. Realisations Your Company received £70 million during the year from the sale of seventeenportfolio companies and the redemption of loan stock by portfolio companies.This generated a profit of £24.1 million over the valuation at the start of theyear and represents an uplift of 53%. Caledonian Building Systems ('Caledonian') was sold in April 2006 to ChampionInc USA. Caledonian is the UK market leader in pre-engineered buildings andoff-site construction, specialising in the design and provision of multi-storycommercial and residential structures using steel modular systems. The companyoperates across the UK from a 32 acre manufacturing site in Newark,Nottinghamshire and has an annual turnover of £90 million. Your Companyreceived capital and income of £23.6 million from the investment, a moneymultiple of five times original investment and an IRR of 108% over two and ahalf years of ownership. In March 2006, Letts Filofax was sold in a secondary buyout to Phoenix EquityPartners for £45 million. With group headquarters based in Edinburgh, LettsFilofax designs and sells organisers, diaries and related accessories throughits two UK and nine overseas subsidiaries. It has one manufacturing plant whichproduces over 22 million books per year. The group is firmly established as theUK market leader and exports its products to over 40 countries worldwide.Dunedin Enterprise invested, directly and via limited partnership funds, a totalof £4.4 million and will have received £26.5 million in capital and income fromthis investment. Dunedin's investment has returned a money multiple of sixtimes which represents an IRR of 50% over five years. In November 2005, Davenham listed on the Alternative Investment Market.Davenham is a leading independent UK asset based lender. It provides lendingsolutions designed to meet the financing needs of SMEs, typically involvingloans of between £10,000 and £3 million. Davenham has a diverse loan portfolio,with its lending activities organised into three divisions: property finance,asset finance and trade finance. Dunedin Enterprise received net proceeds of£11.2 million on listing and retains 2,561,968 ordinary shares in Davenham Groupplc valued at £8.7 million at 30 April 2006. Dunedin Enterprise has received atotal of £14.1 from this investment in capital and income and when aggregatedwith the value of quoted shares held gives a multiple of four times the originalinvestment and an IRR of 33%. C6 Solutions was a manufacturer of sophisticated fine chemicals. A number ofmonths after the buyout of C6 a key customer of the company insourced a numberof significant product lines. These product lines could not be quickly replacedby C6 and a planned closure of the business was announced in January 2005.Following the sale of property and other assets Dunedin Enterprise received £4.6million from the closure. This compares to a valuation of nil at 30 April 2005 Hayley Conference Centres, a provider of conference facilities, and TridentComponents, a manufacturer of components for the automotive industry, were eachacquired as part of the Group Trust portfolio in 2001. These investments wererealised during the year generating proceeds of £3.9 million and £2.6 millionrespectively. This compares to valuations at 30 April 2005 of £2.5 million and£2.5 million. New investments In the year to 30 April 2006, your Company invested £21.6 million (2005: £22.1million) in three new portfolio companies, one new limited partnership fund andnine existing portfolio companies. In June 2005, Dunedin Enterprise invested £7.5 million in the £27 millionmanagement buyout of Zenith. Zenith is a niche provider of bespoke fleetmanagement services, normally to companies with car fleets of between 250 and1,500 cars. The company has a strong service culture, combined with a focus onthe effective use of information technology, allowing it to develop a blue chipclient base which includes Asda, DuPont, Ernst & Young, Persimmon, Remploy andBUPA. Dunedin Enterprise invested £4.3 million in the management buyout of PracticePlan in September 2005. Practice Plan is one of the UK's leading providers ofindependent payment schemes to dental practices. The company is involved in thecreation and facilitation of healthcare maintenance schemes for healthcareprofessionals. These are principally aimed at the dental sector but are alsoused by veterinary surgeons and opticians. In December 2005, Dunedin Enterprise invested £4.1 million in the managementbuyout of RSL Steeper. RSL is the UK's leading supplier of rehabilitationservices with a range of prosthetics (artifical limbs), orthotic (externalsupports) and electronic assistive technology services (electronic devices toassist daily living). During the year to 30 April 2006. Dunedin Enterprise made a commitment of £5million to the LGV5 Private Equity Fund. This fund aims to invest in UKmid-market management buyouts with an enterprise value of between £60 millionand £300 million. This broadens Dunedin Enterprise's exposure to mid-marketbuyouts. LGV5 drawdowns in the year totalled £0.6 million. Follow-on investments into portfolio companies and drawdowns from other buyoutand technology fund in the year totalled £5.1 million. Unrealised value movements The table below summarises the main component of unrealised valuation movementsin the year to 30 April 2006. Three portfolio companies, CGI, Portman and Davenham have contributed a total of£11.1 million to unrealised valuation increases. The increased valuation ofthese companies has been generated from a combination of strong tradingperformance, favourable price earnings movements and quoted share pricemovements. The imminent sale of AIM and Blaze Signs contributed a further £1.3million unrealised valuation increase. Five other portfolio companiescontributed to the remaining £1.3 million unrealised valuation increase. The valuation of Dunedin Enterprise's investments in Gardner, ABI, Total Fitnessand New Horizons have been written down by £10.4 million during the year.Challenging market conditions have affected ABI and Total Fitness, Gardner hasperformed below plan and the new home opening program is taking longer thananticipated at New Horizons. At each of these companies, your Manager isactively working with management to increase profitability and return value tothe investments. A further six investments contributed to the remaining £2.4million unrealised valuation decrease principally due to a write down in valueof technology funds. £'m £'m Value increases • Imminent realisations 6.1 • Trading performance 2.0 • Debt reduction 0.3 • Price earnings movements 4.1 • Other 1.2 13.7Value decreases • Trading performance (12.9) • Other 0.1 (12.8) Net Unrealised Value Movements 0.9 Valuation basis Your Company's portfolio was valued on the following basis: At 30 April £'m 2006 £'m 2005 % % Cost 30.1 45 21.4 24Earnings multiple 31.7 48 61.7 69Imminent sale 2.5 4 4.0 4Net asset value 2.3 3 2.7 3 66.6 100 89.8 100 The weighted average price earnings multiple used to value your Company'sportfolio at 30 April 2006 was 9.9, a discount of 32% to the FTSE All Shareprice earnings multiple of 14.5 on that date (2005: 7.7; 49% discount to theFTSE All Share multiple of 15.0) Portfolio analysis Work has continued to be undertaken in reducing the number of investments heldwithin the portfolio. Four new companies were added to the portfolio andseventeen companies were sold during the year. At 30 April No. 2006 No. 2005 £'m £'m Unquoted companies 19 46.9 29 78.9Quoted companies 1 8.7 1 0.9Buyout Fund 5 7.8 8 7.0Technology funds 4 3.2 4 3.0 29 66.6 42 89.8 Investment category The table below demonstrates your Company has invested 79% of its portfoliodirectly in management buyouts and buyins. A further 12% is invested inmanagement buyouts via limited partnership funds. A total of 91% of theportfolio is thus invested either directly or indirectly in management buyoutsor buyins. At 30 April £'m 2006 £'m 2005 % % Management buyouts/buyins 52.7 79 76.9 86Buyout funds 7.8 12 7.0 8Technology funds 3.2 5 3.0 3Other 2.9 4 2.9 3 66.6 100 89.8 100 Portfolio analysed by industry sector The table below demonstrates that your Manager is committed to ensuring that adiversified portfolio of unquoted investments is held by your Company. 2006 2005 % % Construction and building materials 17 19Consumer products and services - 21Financial services 24 17Healthcare 19 9Leisure and hotels 7 11Specialist manufacturing 2 8Support services 31 15 100 100 Portfolio analysed by age 2006 2005 % % Less than 1 year 25 141-3 years 37 193-5 years 5 44More than 5 years 33 23 100 100 Further Analysis Investors are able to review further information and data relating to DunedinEnterprise at our website www.dunedin.com. Dunedin Capital Partners Limited 16 June 2006 DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2006 Ten Largest Investments The ten largest investments account for 36% of the net assets of DunedinEnterprise as listed below: Company Fully diluted Cost of Directors' Percentage of equity investment valuation net assets percentage % £'m £'m % CGI Group Limited 37.9 5.9 11.2 7.4Davenham Group Holdings Limited 10.1 0.2 8.7 5.7 ZVC Group Limited 20.8 7.5 7.5 5.0 Portman Holdings Limited 16.8 2.2 5.7 3.8New Horizons (Childcare) Holdings Limited 31.6 6.4 5.3 3.5Practice Plan Group (Holdings) Limited 26.2 4.3 4.3 2.8 LGV 4 Private Equity Fund 2.7 3.3 4.1 2.7 RSL Steeper Limited 28.9 4.1 4.1 2.7 Travel & General Holdings Limited 25.9 0.1 2.3 1.5LGV 3 Private Equity Fund 2.4 1.7 1.9 1.3 ___ ____ ___ 35.7 55.1 36.4 DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2006 BALANCE SHEET At 30 April 2006 Restated 2005 £'000 £'000 £'000 £'000 Investments at fair value 144,847 110,244 Investment in subsidiary - 14,000 Current assetsDebtors 196 1,130Cash at bank 6,371 1,147 6,567 2,277Current liabilitiesCreditors: amounts falling due within one year (110) (98)Net current assets 6,457 2,179 Net assets 151,304 126,423 Capital and reservesCalled up share capital 7,592 7,592Share premium account 47,600 47,600Capital reserves:Capital redemption reserve 334 334Capital reserve - realised 87,978 51,709Capital reserve - unrealised 1,598 14,459Revenue reserve 6,202 4,729 Total equity shareholders' funds 151,304 126,423 Net asset value per share 498.2p 416.3p DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2006 INCOME STATEMENT For the year ended 30 April Revenue Capital 2006 Revenue Capital Restated £'000 £'000 Total £'000 £'000 2005 £'000 Total £'000 Gains on investments - 24,982 24,982 - 20,460 20,460Income 6,200 - 6,200 5,387 - 5,387Investment management fee (743) (2,022) (2,765) (636) (1,799) (2,435)Other expenses (558) - (558) (498) - (498)Net return before finance 4,899 22,960 27,859 4,253 18,661 22,914costs and taxInterest payable and (54) (161) (215) (62) (185) (247)similar chargesReturn on ordinary 4,845 22,799 27,644 4,191 18,476 22,667activities before taxTax on ordinary activities (609) 609 - (1,007) 1,007 -Return attributable to 4,236 23,408 27,644 3,184 19,483 22,667equity shareholders Basic return per ordinary 13.9p 77.1p 91.0p 10.4p 63.7p 74.1pshare DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2006 CASH FLOW STATEMENT For the year ended 30 April £'000 2006 £'000 2005 £'000 £'000Net cash inflow from operating activities 3,824 2,258Financial InvestmentPurchase of investments (21,645) (22,126)Purchase of 'AAA' rated money market funds (57,518) (16,836)Sale of investments 70,015 36,499Sale of 'AAA' rated money market funds 10,600 6,000Net cash inflow from financial investment 1,452 3,537 Equity dividends paid (2,763) (2,626)Net cash inflow before financing 2,513 3,169FinancingInterest paid (215) (247)Purchase of ordinary shares - (1,210)Currency loan reduction - (1,432) (215) (2,889) Cash assumed on liquidation of subsidiary 2,926 - Increase in cash for the period 5,224 280Reconciliation of net cash flow to movement in net fundsIncrease in cash as above 5,224 280Cash at bank and in hand at 1 May 1,147 867 Cash at bank and in hand at 30 April 6,371 1,147 Notes 1. The Directors recommend a final dividend of 7.45p pershare for the year to 30 April 2006. The Directors also recommend a specialdividend of 2.0p per share for the year to 30 April 2006. If approved, thedividend will be paid on 15 September 2006 to shareholders on the register atclose of business on 18 August 2006. The ex-dividend date is 16 August 2006.An interim dividend of 2.0p per share was paid on 31 January 2006. 2. The financial information for the year ended 30 April 2005has been restated to reflect changes to UK GAAP. The Company is required tocomply with a number of new UK Financial Reporting Standards ("FRS"), which nowrepresent UK GAAP, in presenting its financial statements for the year ended 30April 2006. These standards have been introduced as part of the process ofaligning UK Accounting principles with International Accounting Standards. Therevised accounting policies differ from those used in preparing the annualfinancial statements for the year ended 30 April 2005 in the following respects. Adjustments to comparative balance sheets (i) Dividends are not recognised as a liability in the balance sheet untildeclared. Therefore the final dividends accrued in respect of the years ended30 April 2004 and 2005 have been eliminated from the respective balance sheetsand are now included in the statement of changes in equity in the periods inwhich they were declared. All comparatives have been restated accordingly. (ii) Listed investments which were previously reported at mid-marketvalue are valued at bid price. 3. The statutory accounts for 2006 contain an unqualified auditreport and will be delivered to the Registrar of Companies following thecompany's Annual General Meeting which will take place at 12 noon on Tuesday 12September 2006 at The Merchants' Hall, 22 Hanover Street, Edinburgh EH2 2EP. 4. The income statement , balance sheet and cash flow set out abovedo not represent full accounts in accordance with Section 240 of the CompaniesAct 1985. The accounts have been prepared in accordance with the Statement ofRecommended Practice 'Financial Statements of Investment Trust Companies'. 5. The annual report will be posted to shareholders in July 2006 andcopies will be available to members of the public at the Company's RegisteredOffice, 10 George Street, Edinburgh, EH2 2DW. This information is provided by RNS The company news service from the London Stock Exchange